SAO PAULO, May 9 (Reuters) - The Brazilian government plans to change the bankruptcy law to help indebted firms emerge faster from creditor protection, Finance Minister Henrique Meirelles told a newspaper.
The changes would reduce the average length of bankruptcy protection to two years, compared to between seven and eight years currently, he said in an interview published on Tuesday in the O Estado de S.Paulo newspaper.
Bankers and lawyers expect bankruptcies to set a record in 2017, with tight credit and the lingering recession forcing a growing number of large Brazilian companies to seek protection from creditors.
The bill, which will be submitted to Congress in June, would make it easier for companies under creditor protection to maintain operations and borrow funds, according to the article.
It would also grant creditors stronger power in the discussions, Meirelles added, without providing further details.
That is the latest in a wide series of microeconomic reforms proposed by President Michel Temer’s administration to lift Latin America’s largest economy from its deepest recession in decades and secure steady growth from then on.
Together with ongoing plans to streamline the social security system, reform labor laws and other efforts, those changes would allow Brazil’s gross domestic product (GDP) to expand at a 3.5 percent to 4 percent annual pace without accelerating inflation, Meirelles said.
Currently, so-called potential growth stands at between 2 percent and 2.25 percent, he said.
Press representatives from the Finance Ministry were not immediately available to comment on the report.
Major firms, such as wireless carrier Oi SA and homebuilder PDG Realty SA, have been ensnared in thorny debt renegotiation talks after filing for protection from creditors as years of robust economic growth faded away. (Reporting by Bruno Federowski; Editing by Bernadette Baum)